Caffey v. Soloray, Travelers Ins. Co., 96,081.

• Decision Date: 29 October 2002
• Docket Number: No. 96,081.,96,081.
• Parties: Randy CAFFEY, Petitioner/Appellant, v. SOLORAY, TRAVELERS INS. CO., and the Workers' Compensation Court, Respondent/Appellees.
• Court: Oklahoma Supreme Court

57 P.3d 870

2002 OK 82

Randy CAFFEY, Petitioner/Appellant, v. SOLORAY, TRAVELERS INS. CO., and the Workers' Compensation Court, Respondent/Appellees.

No. 96,081.

Supreme Court of Oklahoma.

October 29, 2002.

Herbert E. Elias, Jr., Elias & Crawford, Tulsa, for Appellant.

Tenal S. Cooley, III, Looney, Nichols & Johnson. Oklahoma City, for Respondents.

SUMMERS, J.

¶ 1 Claimant was injured on the job by a third-party tortfeasor. He settled for his injuries with the third-party (Walmart), and paid a portion of his settlement to his employer, who had been paying compensation benefits. The question here is whether a statute, 85 O.S.1991 § 44(a), relieves the employer of paying further comp benefits until the claimant can show a deficiency between the net amount he received in the settlement and the amount to which he is statutorily entitled on his compensation claim. The trial court and three-judge panel held the employer was so relieved, but the Court of Civil Appeals reversed and directed the employer to resume making compensation payments. We have granted certiorari review, and now sustain the original orders of the Workers' Compensation Court.

¶ 2 The claimant, Randy Caffey, suffered severe accidental injuries in August, 1997, when a new tire came off the company car he was driving for his employer, Soloray. Mr. Caffey sought Workers Compensation benefits, and while his claim was pending, he filed negligence actions against Wal-Mart, which had installed the tire on the car. On June, 1, 2000, a settlement of those suits in the amount of $300,000.00 was reached. Under the terms of the settlement agreement, Soloray, and its insurer, Travelers, accepted $85,000.00 out of the proceeds in exchange for the release of their subrogation rights for Workers Compensation benefits in the amount of $128,718.00 which had been paid to Mr. Caffey up to that point.

¶ 3 The pertinent portion of the settlement agreement provides:

Mutual Release between the Caffeys, Solaray (sic) and Travelers. In consideration of $85,000 paid by the Caffreys to Solaray and Travelers Property Casualty Corporation, Solaray(sic) and Travelers hereby release Randy Caffey from any obligation to refund settlement proceeds as may have arisen by operation of 85 O.S. § 44. Solaray(sic) and Travelers agree and acknowledge the sums they are to receive shall constitute full and final settlement of any subrogation interest or right they may have now or in the future as a result of Randy Caffey's workers' compensation claim ... Further, the Caffeys hereby release Solaray(sic) Corporation from any obligation it may have by virtue of its employment relationship with Randy Caffey, including, but not limited to the allegations made in the [third-party action] and any [other] claims .... Provided, however, that nothing herein shall be deemed to release Randy Caffey's claims asserted in the worker's compensation claim ... Further, the Caffeys save and hold harmless Solaray (sic) Corporation and Travelers Property and Casualty Corporation from Farmer's Insurance Company's $10,000 lien on the settlement proceeds ...

¶ 4 Soloray and Travelers requested the trial court review the settlement agreement and enter a "Section 44 Order", holding Mr. Caffey's claim for additional Workers' Compensation benefits in abeyance until he was able to establish that a deficiency in excess of $215,000.00 existed. That amount is the net sum the trial court determined Mr. Caffey received after paying the employer/insurer ($85,000) in satisfaction of its subrogation claim.

85 O.S.1991, § 44 provides in relevant part as follows:

(a) If a worker entitled to compensation under the Workers' Compensation Act is injured or killed by the negligence or wrong of another not in the same employ, such injured worker shall, before any suit or claim under the Workers' Compensation Act, elect whether to take compensation under the Workers' Compensation Act, or to pursue his remedy against such other. Such election shall be evidenced in such manner as the Administrator may by rule or regulation prescribe. If he elects to take compensation under the Workers' Compensation Act, the cause of action against such other shall be assigned to the insurance carrier liable for the payment of such compensation, and if he elects to proceed against such other person or insurance carrier, as the case may be, the employer's insurance carrier shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by the Workers' Compensation Act for such case. The compromise of any such cause of action by the worker at any amount less than the compensation provided for by the Workers' Compensation Act shall be made only with the written approval of the Court. Whenever recovery against such other person is effected without compromise settlement by the employee or his representatives, the employer or insurance company having paid compensation under the Workers' Compensation Act shall be entitled to reimbursement as hereinafter set forth and shall pay from its share of said reimbursement a proportionate share of the expenses, including attorneys fees, incurred in effecting said recovery to be determined by the ratio that the amount of compensation paid by the employer bears to the amount of the recovery effected by the employee. After the expenses and attorneys fees have been paid, the balance of the recovery shall be apportioned between the employer or insurance company having paid the compensation and the employee or his representatives in the same ratio that the amount of compensation paid by the employer bears to the total amount recovered; provided, however, the balance of the recovery may be divided between the employer or insurance company having paid compensation and the employee or his representatives as they may agree. In the event that recovery is effected by compromise settlement, then in that event the expenses, attorneys fees and the balance of the recovery may be divided between the employer or insurance company having paid compensation and the employee or his representatives as they may agree. Provided, that in the event they are unable to agree, then the same shall be apportioned by the district court having jurisdiction of the employee's action against such other person, in such manner as is just and reasonable. (Emphasis added)

¶ 5 On October 27, 2000, the trial court entered its order holding that under the statute Soloray and Travelers had no obligation to pay additional compensation benefits until a deficiency in excess of $215, 000 was established. In its order the court noted that its inquiry into the matter under Section 44 was directed first by whether the third-party settlement was effected with or without a "compromise settlement," meaning whether the amount received by the injured worker from the third-party was less than the compensation provided or estimated by the Act. See Prettyman v. Halliburton Co., 1992 OK 63, 841 P.2d 573, and cases cited therein. Since Mr. Caffey had settled his negligence action for an amount in excess of the Workers' Compensation benefits he had received to that point, the trial court found the legal implications of the settlement in regard to employer's subrogation rights and Mr. Caffey's entitlement to future Workers' Compensation benefits, had to be determined under the provisions of Section 44(a) pertaining to settlements without compromise. Prettyman, supra. ¶ 6 That being so, the court found that under these facts the statute provides that the insurance carrier "shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by the Workers' compensation Act for such case."

¶ 7 The court found the provisions of the statute regarding apportionment of expenses necessary to effect a recovery and apportionment by the court or by statutory formula expenses and settlement proceeds were inapplicable since the parties had agreed how the settlement would be apportioned. Section 44(a) recognizes the parties may apportion the recovery by agreement: "provided, however, the balance of the recovery may be divided between the employer or insurance company having paid compensation and the employee or his representatives as they may agree."

¶ 8 The trial court found the terms of the...